Poland central bank holds key rate steady

Poland’s central bank maintained its key interest rate at a record low of 1.5% on Wednesday, as widely expected, numerous outlets including Polish Radio and Reuters reported.

The National Bank of Polandʼs Warsaw headquarters. Photo by Mateusz Szymanski/Shutterstock.com

Polish inflation will likely slow and stay around target after peaking in the first quarter of 2020, the National Bank of Poland (NBP) said, playing down fears that planned hikes in the minimum wage could fuel stronger price growth.

Ahead of a parliamentary election on Oct. 13, the leader of Poland’s ruling nationalist Law and Justice (PiS) party, Jarosław Kaczyński, said on Saturday the minimum wage would be almost doubled to PLN 4,000 (approximately EUR 921) by 2023.

The NBPʼs Monetary Policy Council decided to keep the key reference rate on hold at its record low 1.5%. The previous change in the reference rate was a half-basis point reduction in March 2015.

The bank targets CPI of 2.5% plus or minus one percentage point. Polish CPI hit its highest point in July since 2012, coming in at 2.9%, before decelerating slightly to 2.8% in August, fueling discontent among the public.

Consumer price inflation will peak at 3.5% in the first quarter of 2020 before slowing to 2.8% in the following quarter, central bank Governor Adam Glapiński said on Wednesday. The Lombard rate was retained at 2.5% and the deposit rate at 0.5%. The rediscount rate was left unchanged at 1.75%.

Romania’s headline inflation slowed in August after rising in the previous month, the latest figures from the National Institute of Statistics (INS) show. The consumer price index (CPI) rose 3.9% year-on-year after a 4.1% increase in July.

Czech consumer prices increased at a steady pace in August, the Czech Statistical Office (CZSO) said in a statement. Inflation came in at 2.9% in August, the same rate as seen in July. Inflation had been forecast to ease to 2.8%.

Downside inflation risks have strengthened, the rate-setting Monetary Council of the National Bank of Hungary (MNB) said at its monthly policy meeting in August, the minutes from the meeting released Wednesday show, as cited by state news agency MTI.

Cordia, the Hungary-based Futureal Groupʼs residential development subsidiary, has started building its highest residential building project in Warsaw, named Horyzont Praga, bringing 164 apartments on 18 floors right next to the river Vistula.

Consumer prices were 3.1% higher on average in August 2019 than a year earlier, down from 3.3% year-on-year in July, show monthly data from the Central Statistical Office (KSH). Significant price rises were measured for alcoholic drinks and tobacco, as well as food.

While European Union annual inflation came to 1.4% in July, down from 1.6% in June, the second highest annual inflation rate at national level was registered in Hungary, at 3.3%, according to figures published by Eurostat, the EUʼs official statistical office.

Average wages and the minimum wage in Hungary are lower than in any of the other countries in the Visegrád Four (V4) group (also including Poland, the Czech Republic and Slovakia), according to a report by news site nepszava.hu.